Financial Distress in Container Shipping Industry Rises for Third Straight Year
Continued sluggish demand, a growing mountain of debt, and a radically changing global marketplace has the ocean container shipping industry reeling, say financial analysts.
Supply chain managers are justifiably concerned about the recent consolidation of ocean carrier services, but an even greater threat to their operations may be lurking ahead. According to a new AlixPartners study, many of the major international players face more financial distress—even possible bankruptcy.
Esben Christensen, director of the business advisory firm, says that listed companies have been troubled for the past three years.
“Our analysis suggests that the number of parties controlling containerized transportation on critical trades is shrinking through operational alliances and—potentially in the future—through carriers exiting the business,” he says.
Contributing mightily to this situation, says the study, is a so-so global economy that still hasn’t bounced back from the downturn following the worldwide financial crisis of 2008-2009 the way other post-recession economies have in the past. However, the study also points to several structural issues also buffeting the industry. These include a drive to build “mega vessels,” and fill key trade lanes with these new ships. This represents a trend that over the past decade has steadily increased leverage across the industry and has left it with an average EBITDA interest-coverage rate of just 4.9. This is less than half the rate it was in 2011 (10.8) and less than a third of what it was in 2010 (15.0).
This complete article is available to subscribers
only. Click on Log In Now at the top of this article for full access. Or, Start your PLUS+ subscription for instant access. |
Not ready to subscribe, but need this article?
Buy the complete article now. Only $20.00. Instant PDF Download.
Access the complete issue of Supply Chain Management Review magazine featuring
this article including every word, chart and table exactly as it appeared in the magazine.
Latest News
Cargo Shipping Remains on Hold in Baltimore Following Bridge Collapse Maximizing the Bottom Line: The Power of Procurement Baltimore Bridge Collapse Latest Supply Chain Disruption 6 Questions With … Tom Plotkin February and year-to-date U.S. import volume is solid, reports S&P Global Market Intelligence More NewsLatest Resource
2024 Supply Chain Management Readiness Index Lack of predictive view leaving organizations vulnerable to disruptionAll Resources
Download Article PDF |
Supply chain managers are justifiably concerned about the recent consolidation of ocean carrier services, but an even greater threat to their operations may be lurking ahead. According to a new AlixPartners study, many of the major international players face more financial distress—even possible bankruptcy.
Esben Christensen, director of the business advisory firm, says that listed companies have been troubled for the past three years.
“Our analysis suggests that the number of parties controlling containerized transportation on critical trades is shrinking through operational alliances and—potentially in the future—through carriers exiting the business,” he says.
Contributing mightily to this situation, says the study, is a so-so global economy that still hasn’t bounced back from the downturn following the worldwide financial crisis of 2008-2009 the way other post-recession economies have in the past. However, the study also points to several structural issues also buffeting the industry. These include a drive to build “mega vessels,” and fill key trade lanes with these new ships. This represents a trend that over the past decade has steadily increased leverage across the industry and has left it with an average EBITDA interest-coverage rate of just 4.9. This is less than half the rate it was in 2011 (10.8) and less than a third of what it was in 2010 (15.0).
SUBSCRIBERS: Click here to download PDF of the full article. |
Subscribe to Supply Chain Management Review Magazine!
Subscribe today. Don't Miss Out!Get in-depth coverage from industry experts with proven techniques for cutting supply chain costs and case studies in supply chain best practices.
Start Your Subscription Today!
It’s high time to go beyond visibility Driving supply chain flexibility in an uncertain and volatile world View More From this Issue